Impacts of declining discount rates on optimal harvest age and land expectation values

Richard J. Brazee

Journal of Forest Economics, 2018, vol. 31, issue C, 27-38

Abstract: Several national governments now require the discount rate for public projects with long planning horizons to decrease over the life of a project. Theoretical results that characterize the impacts of a declining discount rate on optimal harvest age and land expectation values in the Faustmann Model are presented. New results include: derivation of conditions for a sequences of optimal harvest ages and land expectation values, comparative statics results, conditions that must be satisfied for multiple optima, and proof that harvesting is never optimal immediately before a discrete decrease in the discount rate.

Keywords: Declining discount rate; Faustmann Model; Land expectation value; Multiple harvest ages; Non-optimal neighborhoods (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (4)

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DOI: 10.1016/j.jfe.2017.06.002

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